Without getting too deep in the weeds of the GOP tax and spending bill that’s being batted around on Capitol Hill right now, it’s safe to say that financial markets have some concerns. Namely, that cutting taxes without cutting spending significantly will, according to the Congressional Budget Office, increase the deficit by $3.8 trillion over the next decade.

That’s spooking bond markets: The yield on the 10-year T-note hasn’t been this high since February. It’s up half a percentage point since early April.

The Federal Reserve controls plenty of interest rates, especially short-term interest rates on government bonds. But rates on long-term Treasuries, as in seven, or ten, or thirty-year bonds, are determined by supply and demand.

“Definitely supply right now is front-and-center,” said Randy Vogel, head of fixed income at Wilmington Trust. 

He said the bond market is concerned that the GOP’s tax and spending package will pile on debt. Meaning, the government will issue more bonds.

“Bond investors are saying, ‘If you’re going to continue to spend money that you don’t have, and issue more supply into the market, then we’re going to want to be compensated with higher yield for that,’” Vogel said.

Higher bond yields are nice for bond investors. But they also push mortgage rates higher and make credit cards and auto loans more expensive.

“They also mean that the federal government is paying more on its debt,” said Ernie Tedeschi, director of economics at Yale’s Budget Lab.

He said the interest payments the government makes as a percentage of gross domestic product have almost tripled over the last 10 years.

And the Congressional Budget Office expects them to keep growing for the next decade.

“That would be well above any levels that we’ve seen in post-World II history in the United States,” he said.

Tedeschi said investors are sending a message to the government with their demand for higher interest rates: “I mean, call them what they are: customers for our debt. If a customer has a concern about a product, that should be a worrying anxiety for the company that makes that product,” he said.

There will always be demand for U.S. Treasuries from banks, insurance companies and the Federal Reserve itself. 

That means investors will always be in a position to send a message to Washington, said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.

“If the cost of debt issuance were to rise so much, in response to fiscal adventurism, that would be a signal that the federal government is reaching the end of its ability to spend,” he said.

The question, said LeBas, is whether Congress or the White House would respond to that feedback.